5 Reasons To Hurry Up And Get Your FHA Mortgage
With the likely installation of QRM looming, it is clear that FHA mortgages will clearly become more popular merely because of the lesser down payment requirements. And as we have all learned, when the demand for something goes up, and the supply remains constant, prices go UP…that is, it becomes more expensive.
Talking Point One
The FHA is permitted each year to insure a specific dollar amount of loans by Congress. I find it unlikely that anyone has factored the increased demand for FHA that QRM will create. Further, getting Congress to allocate more money to HUD in these days of deficits is not a sure thing. I could see a fourth quarter of 2011 with little financing available (or much more expensive financing) to people with less than 20% down.
Talking Point Two
We hear, almost daily, that FHA is only semi-solvent…that they don’t have sufficient reserves. Foolishly, the MIP schedule was altered to give them less cash today (lowering the Up Front MIP) and increasing the longer term collection of monies (the Monthly MIP). To me, that almost insures another MIP change this year…one in which the UFMIP is hiked to get more money in the reserves now, making mortgages more expensive.
Talking Point Three
The FHA is floating rumors about tightening guidelines. Maybe it will be an increase in minimum down payment from 3.5% to 5%. Maybe a cut in seller paid closing costs from 6% to 3%. Maybe both. Regardless, it is going to get harder to qualify. Understand with increased demand and steady supply, lenders will be choosier.
Talking Point Four
Rates are creeping up anyway. With inflation making a strong comeback (fueled by high gas prices), the Fed will look to hike rates to control inflation.
Talking Point Five
The current loan limits are going to be slashed. Presently, FHA will insure loans up to $729,250 in high cost areas. That number is huge when compared to historic loan limits and was instituted when desperate times called for desperate measures. And while we still might be semi-desperate, look for those loan limits to be lowered by at least $100,000 come the end of the year (when Congress sets them for the next year).
For buyers, waiting can be expensive, or worse. You might not even get a loan. For sellers, more expensive loans and less buyers who qualify, will force you to lower your prices even further. ACT NOW!
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Thanks KCM crew as always out there with timely information. This effects both Buyers and Sellers. There is so much for both to navigate these days. Thanks for this helpful and informative post.
I wish that someone, a REAL Realtor and a REAL Loan Officer could talk to someone in Washington who has an iq of over 120 who could realize what it is like out here. We have 1 out of 10 people who call in to find out how to buy a home that actually qualify., and less than that who actually HAVE a downpayment. With the way jobs have been, cut backs, furloughs and so on everyone has suffered. WHEN we stabilize the 1st Time Buyers, the rest of the market will correct and we can all get back to business. Trickle UP theory, I know it is hard to take, but it SHOULD happen. Thanks. Cork/Atlanta
Home sales fell 21% in March compared to the same month last year, and the median sales price also dropped 3%.
A total of 646 existing single-family homes were sold last month, down from 815 in March 2010, according to The Associated Press. The median sales price fell from $164,900 to $159,700. Maine Association of Realtors’ President Mike LePage said the decrease was not a surprise, as last year’s sales were buoyed by the federal homebuyer tax credits. Home sales for the first three months of 2011 were down 7% from the same period last year, while the median sales price inched down less than 0.5%.
Just wondering if you wrote this article. I see the same article posted here with a different person’s name as the author: http://royalagent.net/uncategorized/5-reasons-to-hurry-up-and-get-your-fha-mortgage.htm
Every post on this blog is original content unless otherwise noted. It is extremely rare that we repost someone else’s content and when we do we accredit the original author. Paying KCM Subcribers have the right to re-post this blog WITHOUT accreditation.